Tesoro CEO lifts volumes of Bakken rail project

SAN DIEGO, Calif (Reuters) - Tesoro Corp's (TSO.N: Quote) Bakken crude rail shipping project will be able to transport more than first estimated to its refinery in Washington State by the end of 2012, and could increase even further in the future, Chief Executive Greg Goff said on Monday.

The $50 million project aims to cut Tesoro's use of Alaskan North Slope crude oil at its 120,000 barrels-per-day (bpd) refinery in Anacortes, Washington, while boosting shipments of North Dakota's Bakken crude to 40,000 bpd from the current 1,000 to 2,000 bpd.

The project had targeted shipping 30,000 barrels per day, but Tesoro ordered about 800 rail cars that can accommodate another 10,000 bpd, Goff said.

"Almost a year ago, we put in an order to have about 800 rail cars built. Those 800 rail cars were to accommodate 40,000 barrels per day of movement," Goff told Reuters in an interview at the annual meeting of the American Fuel and Petrochemical Manufacturers in San Diego, California.

Construction began on the unloading facility within the last month, and once built it will accommodate every-other-day rail shipments.

"We need to test the delivery system and how everything fits together," Goff said.

Depending on how well it works, the company can consider increasing shipments to once a day.

"Physically, if it works like we planned, you can go to every day," he said. "But you have to get the rail cars, and rail cars are in tight supply right now."
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